KYIV. May 23 (Interfax-Ukraine) – S&P Global Ratings on May 19, 2017, affirmed its ‘B-‘ long-term issuer credit rating on the Ukrainian capital City of Kyiv, S&P said in a statement.
The outlook is stable, it said.
“The stable outlook reflects our expectations that Kyiv’s strong budgetary performance and ample cash buffers will enable it to withstand uncertainties coming from Ukraine’s very volatile institutional framework and also to provide financial support to its government-related entities (GREs) if needed,” S&P experts said.
The outlook also factors in the rating agency’s assumption that the city will keep its tax-supported debt low.
According to S&P, after debt restructuring, the city of Kyiv has no commercial debt. Its direct debt consists of intergovernmental obligations to Ukraine’s central government.
“We might lower the rating if we were to lower our sovereign ratings on Ukraine, if the city’s tax-supported debt were to increase materially above what we envisage in our base-case scenario, or if the city’s liquidity position were to deteriorate,” S&P said.
The rating agency says that, for the moment, there is no upside potential for its rating on Kyiv.
S&P says it expects Kyiv to continue reporting a strong operating surplus, as well as sound, albeit gradually diminishing, surpluses after capital accounts, which will allow the city to post tax-supported debt below a low 30% of consolidated operating revenues by year-end 2019.
“We think that these factors will counterbalance the very volatile Ukrainian institutional framework for local and regional governments (LRGs), the city’s low wealth levels, and a weak payment culture with a recent track record of defaults,” it said.
